Google Inc Essay

15404 Words Nov 20th, 2015 62 Pages
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REV: NOVEMBER 9, 2006

THOMAS R. EISENMANN

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KERRY HERMAN

Google Inc.

Google’s mission is to organize the world’s information and make it universally accessible and useful.
— Google’s mission statement

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In December 2005, Google paid $1 billion for a 5% stake in Time Warner’s America Online (AOL) unit. The implied $20 billion valuation for AOL came as a surprise; JPMorgan had recently valued the unit at $13.7 billion.1 However, the partnership was important to Google, which had signed a fiveyear deal to continue providing web search results and search-based advertising to AOL, as it had done since 2002. Google was expected to earn about $600 million in gross advertising revenue from
AOL
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Its website,
Google.com, had a 37% share of all U.S. searches in Q3 2005; Yahoo.com, its closest rival, had a 30% share.5 Leveraging its own traffic and that of AOL, Ask.com, and other affiliates, Google garnered about 60% of U.S. search-related advertising revenue in 2005.6 Outside the United States, Google.com held a commanding 68% share of all search traffic in Q3 2005.7 (See Exhibit 2 for search engine market share data.)

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Since its IPO, Google had launched a flurry of products that had expanded its domain beyond web search. These included Gmail, a free e-mail service; Google Desktop, which allowed users to search the file contents of their personal computers; Google Maps; Google Book Search; Google Talk, which encompassed instant messaging and voice over Internet protocol (VoIP) services; and Google
Base, a free online database for all kinds of user-provided content, ranging from help-wanted ads to product reviews. (See Exhibit 3 for a list of Google services and products.)

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Professor Thomas R. Eisenmann and Smita Bakshi, Sebastien Briens, and Shailendra Singh (all HBS MBA 2004) wrote the original version of this case, which is revised and replaced by this version prepared by Professor Thomas R. Eisenmann and Senior Researcher Kerry Herman, Global
Research Group.

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